Cyprus Bailout Gives Excuse to Sell Bank Stocks

Cyprus’ controversial proposal to levy a bank deposit tax is weighing on the banking sector.

Financial stocks are the worst of the 10 S&P 500 large-cap sectors, falling more than 1%, while the KBW Bank Index recently fell 1.3%. The decline throws some dirt on the recent rally for U.S. bank stocks that had continued past the results of the Fed’s stress tests and verdict on the firms’ capital plans the past two weeks.

Investors around the world were rocked by news over the weekend that Cyprus would tax bank depositors to help fund a $13 billion bailout.

Morgan Stanley is leading the big banks lower, while shares of Citigroup, Goldman Sachs, JPMorgan and Bank of America are all down.